pfs figures add up for top namibian project

Hello everybody,i just found this article:
(please note,that it was commissioned by BMN)

PFS figures add up for top Namibian project
Tuesday, 2 February 2010

AN intensive preliminary feasibility study over the past 12-15 months has taken an Australia-based exploration company a step closer to production at its uranium project in Namibia. By Ron Berryman - RESOURCESTOCKS*

Bannerman Resources has progressed its 80%-owned Etango project, located in one of the worlds premier uranium mining jurisdictions, to the definitive feasibility study stage. Once this has been completed in either the last quarter of 2010 or the first quarter of 2011, a development decision will be made.

Based on 240,000 metres of drilling completed over the past three years, the company has established a near-surface resource of 103 million pounds U3O8 (measured and indicated) and 49Mlb (inferred) over a 6-kilometre strike length. A further 35,000m of drilling is being incorporated into a revised resource estimate.

A new management team headed by managing director Len Jubber has invested a great deal of time and effort into taking the original scoping work and the preliminary feasibility study through to the definitive feasibility stage.

One of a number of benefits of this rigorous scrutiny has been the potential introduction of a new processing technology, which is expected to result in significant cost savings.

The prefeasibility study progressed to schedule in mid-2009 with heap leaching identified as the most likely processing option, Jubber explained to RESOURCESTOCKS.

However, shortly before the study results were presented to the board in July, preliminary beneficiation tests highlighted the potential to introduce a flotation concentrate process with significant benefits to the projects economics.

While flotation is commonly used in gold and base metal operations, it has not previously been used in uranium processing.

Further testing is scheduled to confirm and finesse the flotation concentrate leaching process prior to reaching a decision on the ultimate processing flowsheet for the Etango project.

In 2009, Bannerman ran bench tests on floating the uranium mineralisation out of the material using a range of different crush sizes and reagent suites, and found that more than 94% of the uranium in the ore could be floated in about 5-6% of the starting mass.

Thats an exceptional result and we are now undertaking confirmatory locked-cycle testwork and pilot plant testwork, which will be completed in the March quarter, Jubber said.

Flotation concentrate leaching involves a processing plant to crush and grind the ore down to a specific size where it can be beneficiated through flotation in a solution with the tailings going to a storage facility. According to our testwork, the ore grading 210-220 parts per million uranium oxide can be concentrated to a grade of 3500-4000 parts per million uranium oxide in only 5-6 per cent of the starting ore.

We have a number of opportunities from there. We can either sell the concentrate to another producer or have a smaller, tank-based leaching plant, which is what we have modelled in our costings, where the concentrate will be leached and the resultant U3O8 dried and packaged.

Jubber indicated that while the flotation concentrate tank leaching option would be pursued, heap leaching had been maintained as a viable alternative pending final confirmation of the flotation process.

The company has a number of priorities for the next 12 months apart from the flotation process.

An application for a mining licence has been lodged; an infill drilling program to prove up a larger component of measured resources and enable resource model verification will continue in 2010; drilling since July 2009 will be incorporated into a resource upgrade in the first quarter of 2010; and the company plans to follow up dialogue with potential strategic partners.

Etango is planned to be a conventional open pit mining operation, with a decision yet to be made on whether mining activities will be owner-operated or contractor-operated.

Current estimates are for a contractor operating the mine, Jubber said.

Bottom-line details from the companys preliminary feasibility study included an initial capital cost of $US555 million and a mine life in excess of 16 years, with an operating cash cost of $US38/lb U3O8 for the first five years and a life of mine operating cash cost of $41/lb with an estimated uranium price received as $70/lb.

The definitive feasibility study has already identified a number of initiatives to reduce operating costs.

The potential end users and potential strategic partners are interested in key factors such as the resource base, the mine life and the location, Jubber said. While the cash cost is important, it is not as important as long-term security of supply. This project ticks these boxes.

With an annual throughput of 15 million tonnes of ore at an average grade of 211 parts per million and a recovery rate of 91 per cent for about 6 million pounds of U3O8, the project has substantial strategic appeal.

There was concern in the marketplace after our announcement regarding our estimated operating costs where investors compared the $US41 a pound over the projects mine life with the current spot price per pound.

The uranium price from a producer to an end user is, for the vast majority of producers, not based on the spot price. It is determined by one-on-one contract delivery arrangements with a buyer who might be looking for product starting in three to four years time and would then negotiate for delivery at a certain price.

During 2009, the price negotiated in such contracts ranged between $US62 and $70 per pound.

Jubber said that investors needed to take into account the long-term contract uranium price when assessing the economics of the project.

While Bannerman is sitting on a very healthy life-of-mine production estimate of 97Mlb of U3O8, the 2010 exploration program will test a mineralised zone to the south of Etango called Hyena where 20 of 42 recent reverse circulation drillholes have intersected significant mineralisation with best results of 16m at 1021ppm U3O8 from 84m downhole depth.

With the prospect of additional resources and a potential start-up in 2013, Bannermans Etango project has plenty of upside.

Located in the premier west African uranium region of Namibia, the project has outstanding infrastructure, situated between Arevas Trekkopje project in the north, Paladins Langer-Heinrich to the southeast and Rio Tintos Rössing and Extract Resources Rössing South to the east,
Etango has the benefit of established roads and services and direct access to the port of Swakopmund.

* This report, first published in the January/February 2010 edition of RESOURCESTOCKS magazine, was commissioned by Bannerman Resources